CP2-2 (continued)
Req. 2
a.
Cash (+A) ………………………………………………………………….
200,000
Common Stock (+SE) …………………………………………….
200,000
b.
Cash (+A) ………………………………………………………………….
30,000
Note Payable (long-term) (+L) ………………………………….
30,000
c.
Building (+A) ………………………………………………………………
141,000
Cash (-A) ………………………………………………………………
41,000
Note Payable (long-term) (+L) ………………………………….
100,000
d.
Equipment (+A) ………………………………………………………..
100,000
Cash (-A) ……………………………………………………………..
100,000
e.
Supplies (+A) ……………………………………………………………
10,000
Accounts Payable (+L) …………………………………………..
10,000
Beg.
Beg.
Beg.
(a)
(c)
(e)
(d)
(b)
(d)
End.
End.
End.
Beg.
Beg.
(c)
End.
End.
Beg.
Beg.
(e)
(b)
(c)
End.
End.
Beg.
Beg.
End.
End.
Fundamentals of Financial Accounting, 5/e 2-32
CP2-2 (continued)
Req. 4
ATHLETIC PERFORMANCE COMPANY
Trial Balance
At July 31
Debits
Credits
Cash
$105,000
Supplies
15,000
Equipment
118,000
Building
341,000
Land
90,000
Accounts Payable
$ 14,000
Notes Payable
147,000
Common Stock
508,000
Retained Earnings
0
TOTALS
$669,000
$669,000
Req. 5 ATHLETIC PERFORMANCE COMPANY
Balance Sheet
At July 31
Assets
Liabilities
Current Assets
Current Liabilities
Cash
$105,000
Accounts Payable
$ 14,000
Supplies
15,000
Total Current Liabilities
14,000
Total Current Assets
120,000
Notes Payable
147,000
Total Liabilities
161,000
Equipment
118,000
Stockholders’ Equity
Building
341,000
Common Stock
508,000
Land
90,000
Retained Earnings
0
Total Stockholders’ Equity
508,000
Total Assets
$669,000
Total Liabilities & Stockholders’
Equity
$ 669,000
Req. 6
CP2-3
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
a.
Equipment
Cash
+21,000
-5,000
Note
Payable
(long-
term)
+16,000
b.
Cash
+20,000
Common Stock
+20,000
c.
Cash
+50,000
Note
Payable
(long-
term)
+50,000
d.
Supplies
Cash
+4,000
-4,000
e.
Buildings
Cash
+41,000
-12,000
Note
Payable
(long)
+29,000
f.
No effect (because the president has not yet started working for the company).
Req. 2
a.
Equipment (+A) …………………………………………………………
21,000
Cash (-A) ……………………………………………………………..
5,000
Note Payable (long-term) (+L) …………………………………
16,000
b.
Cash (+A) …………………………………………………………………
20,000
Common Stock (+SE) ……………………………………………
20,000
c.
Cash (+A) …………………………………………………………………
50,000
Note Payable (long-term) (+L) …………………………………
50,000
d.
Supplies (+A) …………………………………………………………….
4,000
Cash (-A) …………………………………………………………….
4,000
e.
Buildings (+A) ……………………………………………………….…..
41,000
Cash (-A) ……………………………………………………………..
12,000
Note Payable (long-term) (+L) …………………………………
29,000
f.
No effect (because the president has not yet started working for the company).
CP2-3 (continued)
Req. 3
Cash (A)
Accounts Receivable (A)
Inventory (A)
35,000
Beg.
5,000
Beg.
40,000
20,000
5,000
(a)
50,000
4,000
(d)
12,000
(e)
End.
5,000
End.
40,000
84,000
Supplies (A)
Equipment (A)
Buildings (A)
5,000
Beg.
80,000
Beg.
120,000
4,000
(a)
21,000
(e)
41,000
9,000
End.
101,000
End.
161,000
Beg.
2,000
Beg.
Beg.
End.
2,000
End.
End.
80,000
Beg.
150,000
Beg.
50,000
Beg.
16,000
(a)
20,000
(b)
50,000
(c)
29,000
(e)
End.
End.
50,000
End
Fundamentals of Financial Accounting, 5/e 2-35
CP2-3 (continued)
Req. 5 PERFORMANCE PLASTICS COMPANY
Balance Sheet
At December 31
Assets
Liabilities
Current Assets
Current Liabilities
Cash
$ 84,000
Accounts Payable
$ 37,000
Accounts Receivable
5,000
Total Current Liabilities
37,000
Inventory
40,000
Supplies
9,000
Notes Payable
175,000
Total Current Assets
138,000
Total Liabilities
212,000
Notes Receivable
2,000
Stockholders’ Equity
Equipment
101,000
Common Stock
170,000
Buildings
161,000
Retained Earnings
50,000
Land
30,000
Total Stockholders’ Equity
220,000
Total Assets
$432,000
Total Liabilities & Stockholders’
Equity
$ 432,000
Req. 6
As of December 31, more of PPC’s financing has come from stockholders’ equity.
Stockholders’ equity has financed $220,000 of PPC’s assets and liabilities financed
$212,000.
Fundamentals of Financial Accounting, 5/e 2-36
ANSWERS TO GROUP A PROBLEMS
PA2-1
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Equipment
Buildings
Notes
Payable
Common
Stock
Retained
Earnings
(a)
+100,000
=
+100,000
(b)
+120,000
=
+120,000
(c)
–200,000
+200,000
=
(d)
–3,000
+30,000
=
+27,000
(e)
–3,000
=
–3,000
(f)
–7,000
+10,000
=
+3,000
(g)
No effect
=
+10,000
+37,000
+200,000
=
+147,000
+100,000
Req. 2
The transaction between the stockholder and his neighbor (event g) was not included in
the spreadsheet. Because event (g) occurs between an owner and another person, the
separate entity assumption implies this transaction does not affect the business.
Req. 3
PA2-1 (continued)
Req. 4
As of the end of the year, MI’s assets were financed by slightly more stockholders’
PA2-2
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
a.
Cash
+400,000
Common
Stock
+400,000
b.
Cash
+100,000
Note
Payable
(long)
+100,000
c.
Buildings
Cash
+182,000
-82,000
Note
Payable
(long)
+100,000
d.
Equipment
Cash
+200,000
-200,000
e.
Supplies
+30,000
Accounts
Payable
+30,000
Req. 2
a.
Cash (+A) …………………………………………………………………
400,000
Common Stock (+SE) ……………………………………………
400,000
b.
Cash (+A) …………………………………………………………………
100,000
Note Payable (long-term) (+L) …………………………………
100,000
c.
Buildings (+A) ……………………………………………………….…..
182,000
Cash (-A) ……………………………………………………………..
82,000
Note Payable (long-term) (+L) …………………………………
100,000
d.
Equipment (+A) ………………………………………………………..
200,000
Cash (-A) ……………………………………………………………..
200,000
e.
Supplies (+A) …………………………………………………………….
30,000
Accounts Payable (+L) …………………………………………..
30,000
PA2-2 (continued)
Req. 3
Cash (A)
Supplies (A)
Equipment (A)
36,000
Beg.
7,000
Beg.
118,000
400,000
82,000
(c)
(e)
30,000
(d)
200,000
100,000
200,000
(d)
254,000
End.
37,000
End.
318,000
Beg.
100,000
Beg.
200,000
(c)
182,000
End.
282,000
End.
200,000
30,000
(e)
(b)
(c)
50,000
End.
End.
400,000
(a)
580,000
End.
259,000
End.
Debits
Cash
Supplies
Equipment
Buildings
Land
Accounts Payable
Notes Payable
Common Stock
TOTALS
$1,091,000
$1,091,000
Fundamentals of Financial Accounting, 5/e 2-39
PA2-2 (continued)
Req. 5 DELIBERATE SPEED CORPORATION
Balance Sheet
At July 31
Assets
Liabilities
Current Assets
Current Liabilities
Cash
$ 254,000
Accounts Payable
$
50,000
Supplies
37,000
Total Current Liabilities
50,000
Total Current Assets
291,000
Notes Payable
202,000
Total Liabilities
252,000
Equipment
318,000
Stockholders’ Equity
Buildings
282,000
Common Stock
580,000
Land
200,000
Retained Earnings
259,000
Total Stockholders’ Equity
839,000
Total Assets
$ 1,091,000
Total Liabilities &
Stockholders’ Equity
$ 1,091,000
Req. 6
As of July 31, most of DSC’s financing has come from stockholders’ equity.
Stockholders’ equity has financed $839,000 of DSC’s assets and liabilities financed
$252,000.
Fundamentals of Financial Accounting, 5/e 2-40
PA2-3
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
a.
Inventory
Cash
+30
-30
b.
Cash
+20
Common Stock
+20
c.
Equipment
Cash
+170
–80
Note
Payable
(long-
term)
+90
d.
Cash
+10
Note
Payable
(short-
term)
+10
e.
No effect.
Req. 2
a.
Inventory (+A) ……………………………………………………………
30
Cash (-A) ……………………………………………………………..
30
b.
Cash (+A) …………………………………………………………………
20
Common Stock (+SE) ……………………………………………
20
c.
Equipment (+A) ………………………………………………………..
170
Cash (-A) ……………………………………………………………..
80
Note Payable (+L) …………………………………………………
90
d.
Cash (+A) …………………………………………………………………
10
Note Payable (short-term) (+L)………………………………..
10
e.
No effect.